ELR Citation: ELR 20357
No(s). 92-56379 (9th Cir. Dec 6, 1994)

The court reverses and remands a district court's summary judgment that a chemical company is not entitled to contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) from two rubber companies that purchased styrene from it and allegedly sold contaminated styrene back to it for redistillation. During World War II, the U.S. government contracted with the three companies and a fourth company to construct, lease, and operate a government-owned, synthetic rubber manufacturing complex on government-owned land. The complex included a unit where the chemical company produced styrene and two units where the rubber companies combined the styrene and butadiene to form synthetic rubber. The rubber companies returned contaminated styrene to the chemical company for redistillation. The chemical company contends that the rubber companies arranged for treatment of the contaminated styrene and that they are thus liable under CERCLA §107(a)(3). The court first notes that the rubber companies do not dispute that styrene is a hazardous substance under CERCLA and that the chemical company treated it by redistilling the contaminated styrene to remove contaminants. The rubber companies also agree that the chemical company released the contaminants and associated styrene into the environment when it dumped the distillation residue into pits at the site. The district court held that the rubber companies did not arrange for treatment of the contaminated styrene because they did not own the contaminated styrene during the redistillation process and that they did not control the process that resulted in the release.

The court holds that neither the language of the statute nor the cases interpreting it impose these limits on §107(a)(3). The court holds that the record before the district court was sufficient to support a finding that the rubber companies arranged to transfer contaminated styrene to the chemical company for completion of the redistillation process that led to the release of the hazardous substances. The flow of fresh styrene from the chemical company to the rubber companies for the manufacture of synthetic rubber, the shipment of contaminated styrene to the chemical company for removal of contaminants, and the return of fresh styrene to the rubber companies for further production of synthetic rubber was a prearranged process essential to the production of synthetic rubber at the complex. Removal and release of the hazardous substances was not only the inevitable consequence, but the very purpose of the return of the contaminated styrene to the chemical company. The court notes that cases on which the rubber companies rely recognize that a transaction is not beyond the reach of §107(a)(3) simply because the transaction is cast as a sale. A trier of fact could readily conclude on the facts thus far in the record that the rubber companies' transfer of contaminated styrene to the chemical company was not a sale of a useful product but an arrangement for treatment of a hazardous waste. Although the chemical company paid the rubber companies seven cents for each pound of contaminated styrene they sent to the chemical company, it charged them nine cents for each pound of uncontaminated styrene it returned. A trier of fact could find the substance of the transactions to have been that the rubber companies paid the chemical company two cents per pound to remove the contaminants from the used styrene and return the fresh styrene to them—that they simply arranged and paid for treatment of the contaminated styrene.

A dissenting judge would hold that the court need not resolve the legal issues of the case because there is no final judgment on all issues and all parties. When there is one, it is likely to moot the dispute before the court, because all three companies had clauses in their contracts with the government requiring the government to hold them harmless from any liabilities arising out of their operation of the rubber plant.

[Related cases are published at 14 ELR 20376 and 20716, 18 ELR 20470, and 19 ELR 20965.]

Counsel for Plaintiff
Stephen McKae
Hardin, Cook, Loper, Engel & Bergez
1999 Harrison St., 18th Fl., Oakland CA 94612
(510)444-3131

Counsel for Defendant
Catherine M. Sheafor
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202)514-2000

Before Browning, Boochever and Kleinfeld, JJ.